It may be an old story, but the aging baby boomer population is driving growth in yet another health and beauty care category.
Skin care and related products are getting a boost from the changing demographics and anti-aging introductions from major manufacturers with potent marketing budgets.
High price points seem to make little difference to consumers intent on regaining or maintaining a youthful appearance. As a result, supermarkets are selling skin care products at higher rings than many previously thought possible.
Bath and body items also do well, especially body washes, but facial treatments are the hottest part of this category.
“Skin care is emerging as a very important item, not only to the female shopper, but to the male shopper as well,” said a nonfood executive with a Southeastern retailer.
“In skin care, we see a lot of high-end facial products that seem to be driving the category,” said Jack Serota, vice president, GM/HBC, Price Chopper Supermarkets, Schenectady, N.Y. Companies like Ponds, L'Oreal and Procter & Gamble “keep coming out with new skin care items — facial items — that cater to the baby boomer generation. These are the women that are 40-plus and are trying to maintain youth.
“They are doing a great job in marketing those products. The retails keep going up and the demand keeps going up with it.”
While these products come in at a higher price point than their predecessors, some consumers view them as a “nice-to-have” affordable luxury worth the extra dollars, sources told SN.
“That trend has been developing slowly,” said Dan Spears, director, HBC/GM, Ingles Markets, Asheville, N.C.
“We have items in skin care that, a few years ago, we wouldn't have carried. That is, some of the higher-priced skin care items that we typically stayed away from. But there's a demand out there, and the customer was buying it somewhere, so we have increased our presence of higher-priced skin care items in the store.”
Wayne Bryant, director of GM and HBC sourcing, American Sales Co., Lancaster, N.Y., agrees there's a trend to HBC products that offer affordable luxury. “We are selling merchandise today at price points we never dreamed we could sell, and that's across a variety of categories, health care or beauty care,” he said. American Sales is a division of Ahold USA, Quincy, Mass.
However, cost pressures facing American families, such as gasoline, challenge supermarkets to merchandise those products better. “It makes the value equation really important, so when we put these high-priced items on the shelf, we need to do it in a manner that makes consumers say, ‘This is a good value, I want to buy it here.’ That's the real competitive pressure that retailers face, but customers are responding to it,” Bryant said.
In its report, “Anti-Aging Skincare Treatments,” Mintel International, Chicago, predicted that sales in the U.S. of skin care treatments will grow 23% at current prices and 16% at constant prices this year over 2004, and attain a total of $496 million at food, drug and mass outlets, excluding Wal-Mart. Facial anti-aging products will increase 27% at current prices and 20% at constant prices over the same period, Mintel reported.
The report also addressed demographics. From 2004 to 2009, Americans age 45 to 54 will grow 7.4%; the 55-64 age group will increase 20%; and the 65-74 age group will rise 12.2%.
“This large and growing population believes that looking old is not only unflattering, but also unnecessary,” the report stated. “Baby boomers grew up in an era when science and technology first promised answers to life's problems and anti-aging skin care products are directly marketed towards those expectations and beliefs.”
While products in this area have mostly been limited to national brands, Mintel also predicted the rapid growth of private-label anti-aging facial creams.
However, professional-grade brands will continue to grow in supermarkets, said Rachael McFarland, cosmetics research analyst, Mintel. “Even if packages say they are only sold in salons or spas, manufacturers have them in drug stores and supermarkets, and people are purchasing them in those supermarkets and drug stores because of their convenience. Women don't want to see their hairdresser every time they want to purchase shampoo and things like that. So the market is continuing in this direction.”
“There is little price resistance on some of these products with aging baby boomers; there is a no-limit feel about it,” said Kat Fay, editor/consumer analyst at Mintel. “It is sensible to have those products available at supermarkets because we don't all buy them at department stores,” she said.
While mid-priced bath and body products sell adequately at Bashas', Chandler, Ariz., upscale skin care does especially well, said Sue Vodika, HBC buyer, category manager. “I do a pretty good business in skin care for women,” she said. “I carry the Olays and the L'Oreals. I do good business with [products] at the $29.99 [price point] because the customers know it works.”
“I think the explosion is going to be in skin care as opposed to bath and body,” said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass. Drug stores have it now with boutique sections. “The higher ticket barrier on retail prices is going away. You are going to see more expensive product from mainstream suppliers and you are going to see more space devoted to it,” he said.
“In bath, body and skin care, the key trends continue to be trading consumers up to the solutions that typically they would buy in either a professional salon for skin, or in larger mass department stores,” said Doug Schwab, director of health, beauty and personal care, Supervalu, Eden Prairie, Minn.
“Those types of products are now coming into the general grocery area at a value price compared to what they could be in some of the other formats that they've been in before. The growth will continue into some higher-end skin care products, and to the boutiquing of some of the products, such as those that you would find in a body/bath type of store. You are going to continue to see those growing within the traditional retail grocery stores.”
Regarding anti-aging skin care products, “we have started increasing our variety in that particular area,” said Sammy Snell, director, HBC/GM, W. Lee Flowers & Co., Lake City, S.C. “The customers are responding very positively, although we've had some unfortunate issues with some products that came out and had to go on allocation because the demand was a lot greater than they thought it would be.”
If there is any question about the ability of supermarkets to sell high-ticket skin care items, they need look no further than the nearest Wal-Mart, long the destination of low-income shoppers, said Bill Martin, category manager, Valu Merchandisers, Kansas City, Kan. “Wal-Mart is trying to upgrade their look, and also trying to appeal to the upper-end customer and move people up.”
The consumer base of Valu's retailer customers and Wal-Mart's stores is mostly the same, he noted. “We are definitely competing strongly against them, and if they can have Olay Definity or a L'Oreal microdermabrasion kit, our guys can sell the same thing,” Martin said. “It seems like everything is moving into the $20 price-point area and, like in other categories, if the consumer will bite on that, we'll all have higher sales and higher penny profits.”
“You've got a lot of changes in the aging formulas in skin care,” said Mike Forrest, HBC category manager, Brookshire Brothers, Lufkin, Texas. “You have got to stay on top of what that is in terms of anti-aging creams and wrinkle-removing formulas. There are so many items out there right now, I have struggled with what do I carry and what do I not carry. It is overwhelming for grocery.”
Additional reporting: Wendy Toth
Like other categories in the supermarket, bath, body and skin care items are starting to feature more natural ingredients.
“In bath and body we've had quite a bit of success the past couple of years expanding into upscale and natural/organic bath and body care products, both from the actual bathing-type products and the accessory products, such as items like loofahs and brushes, sponges and things like that,” said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif.
“More and more of the independent retailers are finding success marketing those products and have been very happy with the sales and the incremental profitability.”
Skin care products are trending toward more natural items, said Christina Melillo, nonperishable merchandiser, Buehler's Food Markets, Wooster, Ohio. “Minerals are big right now, so I think that segment is gearing toward the products that make you feel like you are giving yourself more treatment than just fragrance or a moisturizing. It's leading toward something that has something a little more in it that is beneficial to your skin,” she said.
Retailers have seen this trend in products for men, as well as for women. “As natural skin care has increased in demand, so has men's natural skin care,” said Roxanne Brodheim, national category manager for body care, Wild Oats Markets, Boulder, Colo.
“I believe the consumers most likely to purchase men's natural skin care are highly educated and concerned about toxins and chemicals being absorbed through the skin. This is why we have seen an increase in this category.”
— D.A. and W.T.